European stress tests have eased investor anxiety by providing more transparency than expected, Corporate America has shown some decent reports (overall reports are tracking better than expected),  China may be backing off on their tightening to some degree !  Does this mean the market can move up now and is the low for the year put in?   This is particularly interesting now because we have finally managed to close above SPX 1100 as of Friday.    In the past couple of months, this usually means the current leg up is nearing its end.   Can we break the recent "trend" for a change?.   The answer seems to be ‘yes’ as risk is likely to the upside now after all the recent developments.

Currently, there are three things investors' minds are focused on.   They are Euro area,  China and U.S. Economy.     While Euro land and China have not proven enough to all investors just yet,  the perception is likely changing to the positive side as Western Europe’s economy is accelerating (last weeks data) and China has most likely ’bottomed’ after a year long slide.    All one has to look at is the recent performance of Euro and Commodity plays as growing optimism toward global growth has appeared.    We don't really don’t need dig any further, we just have to see people voting with their money as Industrials/ /Materials /Transports  sectors were the best performers last week.    As far as the U.S. Economy goes, a lot of people seem to be confused with the unemployment rate vs. the profit of Corporate America.    Both are giving conflicting signals to the well being of this Economy.    Of course, we have been arguing all along that this is the kind of Economy that rewards the better executed strategy and corporate management.   The unemployment rate may stay at a high rate, but it doesn't mean that many of our favourite companies can't churn out some mouth dropping profits.

Ok, we are barely two weeks into the EPS season and we have already had some great reports from the meat and potatoes players.  Now come the smaller caps.  We're really looking forward to the remainder of this earning season and won't be hesitant to buy quality plays off pullbacks.   Overall,  things do look pretty interesting in the coming weeks, we have a good probability to give the most recent high a run for it’s money.